Hi All,
Banks chanrge Service tax on the foreign currency translation. Say, if there is an incoming remittance of USD 10000, and the same is converted to INR 44000, banks will charge service tax on INR 44000. If tax rate is say 0.1% INR 43956 will be credited in the account.
SAP entry in this case is :
F-28 / F-29
CR Customer 44000 (LC amount)
DR Bank 43956
DR Service Tax 44
In case of vendor payments, the entry is :
F-48 / F-53
DR Vendor 44000
CR Bank 44044
DR Service tax 44
Pls share with me if you have configured service tax on payment transactions mentioned above.
WEF FY 2011, tax rate is on slab basis. This can be achieved by wrting Z routines to the tax conditions. But this can be done only if service tax is calculated on bank line item in these transactions.
Edited by: Sreenivas Jessu on Jun 9, 2011 6:40 PM